U.S. Court Approves Genesis Plan To Sell $1.6B In GBTC Shares – Crypto News – Crypto News
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U.S. Court Approves Genesis Plan To Sell $1.6B In GBTC Shares U.S. Court Approves Genesis Plan To Sell $1.6B In GBTC Shares

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U.S. Court Approves Genesis Plan To Sell $1.6B In GBTC Shares – Crypto News

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The ruling follows Genesis settling with the SEC and NYAG earlier this month.

The saga resulting from the high-profile CeFi failures of the 2022 bear market continues to unfold, with a court ruling paving the way for Gemini Earn users to soon access their frozen assets.

On Feb. 17, Gemini, the cryptocurrency exchange founded by the Winklevoss twins, tweeted that U.S. judge Sean Lane had approved a Motion Authorizing Sale of Trust Assets for Genesis, its debtor, as part of the insolvent crypto broker’s bankruptcy proceedings three days prior.

Per the plan, Gemini may now begin offloading the collateral assets held on behalf of its Earn users, comprising more than 30.9M Grayscale Bitcoin Trust shares worth $1.62B. The company may also monetize its shares in Grayscale’s Ethereum and Ethereum Classic trusts.

“This is an important step that will facilitate in-kind distributions to Earn users (i.e., the return to Earn users of the specific digital assets they loaned rather than an equivalent value in dollars or an alternative cryptocurrency),” Gemini said.

Genesis borrowed roughly $900M worth of crypto belonging to 340,000 Gemini Earn customers prior to Genesis filing for bankruptcy in January 2023. Genesis’s insolvency came after contagion risks resulting from the failure of FTX wracked the CeFi sector.

Genesis said the sales will allow it to avoid paying $1.9M in monthly fees on its trust agreements. Lane dismissed an objection from Digital Currency Group (DCG), Genesis’s parent company, which warned the sale could complicate matters should Genesis fail to receive court approval for its overall bankruptcy plan.

Genesis fallout

Judge Lane’s ruling follows Genesis establishing settlements with the U.S. Securities and Exchange Commission (SEC) and New York Attorney General Letitia James earlier this month. The settlements mandate that Genesis prioritize customer repayments as part of its plan to liquidate assets and shut down, with the SEC set to receive a $21M fine if any funds are left over.

DCG claimed the plan overpays customers and creditors at its own expense as an equity holder, asserting that U.S. bankruptcy law requires that customers’ holdings are valued based on asset prices as of when Genesis filed for bankruptcy in January 2023. However, the recently approved settlements enable payouts allowing for the rise in cryptocurrency prices since.

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